1981 (9) TMI 33

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.... J.-The Commissioner of Income-tax, Madras, has asked for a reference of the following question as arising out of the Tribunal's order : " Whether, on the facts and in the circumstances of the case, and having regard to rule 19A of the Income-tax Rules, 1962, the Appellate Tribunal was justified in holding that borrowed capital should not be deducted as a liability while computing the capital e....

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....477. The appeal of the assessee to the AAC was unsuccessful. The matter was thereafter taken on appeal to the Tribunal. The Tribunal accepted the assessee's case on the ground that there was no liability with reference to the said sum of Rs. 1,53,37,794 as it was not either borrowed money or debt owed to a third party. In the course of the Tribunal's order, in para. 6, it is stated as follows: ....

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.... computation of capital employed in an industrial undertaking. That provides that the aggregate of the amounts representing the values of the assets as on the first day of the accounting period of the undertaking should first be ascertained in a specified manner as pointed out therein. Clause (3) of rule 19A provides: " From the aggregate of the amounts as ascertained under sub-rule (2) shall b....

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....was admittedly drawn only from the rayon and staple fibre unit, it was clearly neither a borrowal nor debt owed by the assessee. The expressions " borrowed monies " and " debts owed " by the assessee postulate the existence of third parties from whom the monies are borrowed or the debts were incurred. In the absence of any such third party in the present case, when the facts that the amount was dr....